Legislative Costs – Your shout

"This is completely unnecessary legislation brought in by a government eager to be seen to be cracking down on binge-drinking." Jeremy Beadles, chief executive of the WSTA, comments this month

Whatever the intention when a government introduces new legislation, one certainty applies; there will be increased costs for those who need to comply. The Wine & Spirit Trade Association (WSTA) has had more than its fair share of new regulations over the last two years, and all of them have cut into business margins. In particular, the Licensing Act 2003, which came into force in November 2005, and the Duty Stamp Regulations 2006 have added significant costs to different parts of the supply chain.

There was little doubt that the old licensing system, administered by local magistrates, needed reform to modernise and simplify it for users, as well as to provide consistency and certainty. The whole trade recognised the need for reform. However, the problem with change is that there is no guarantee that you will like the alternative.

The problem with the new licensing regime is that many of the problems with the old system have not been resolved and yet the costs for business have increased out of all proportion. We have been feeding evidence from our members into the numerous reviews going on across government about the impact of the Licensing Act, and so far the message has been consistent: the complexity of the forms and process, the huge increases in licence fees (particularly the hidden costs of obtaining a licence) and the inconsistency with which local authorities are interpreting the Act have all added significant bureaucracy and cost to businesses.

However, our next fight may be our most important one yet; the Fees Review Panel is looking at the level of future fees, and local authorities continue to argue that they need more money to administer the systems.

The WSTA has been collecting evidence from members that shows that business costs for complying with the new licensing regime have increased by between 300% to 1,000% depending on the type of business. A justices’ licence under the Licensing Act 1964 costs £30 for a three-year period. A premises licence alone under the Licensing Act 2003 costs from £100 for the smallest businesses, up to £635 for the largest businesses (without including the potential multiplier) for the first year.  The annual charges thereafter range from £70 to £350. Licensees must pay an annual fee compared to a small charge every three years, meaning that the cost of obtaining a licence has disproportionately increased in relation to the benefits provided.

There were also hidden costs in applying for a new licence. These include the costs of achieving the compulsory qualification, the correct plan of the premises, advertising an application and the legal costs of obtaining advice to wade through a supposedly simplified regulatory regime. Many smaller businesses had not budgeted for such costs, which were an unexpected burden.

At least the intentions of reforming the licensing system appeared good. The intentions of the Duty Stamp regime appear very unclear. The WSTA never wanted the Duty Stamp Scheme and we opposed its introduction. The motivation appeared to be a political decision by the government, which wanted to be seen to be tackling certain types of spirit fraud. We don’t believe that the Duty Stamp Scheme will achieve any significant reductions in levels of fraud; however, it will add significant costs and administrative burdens. It is also a barrier to trade. Still, it could have been worse; the WSTA and an alliance of trade associations did manage to secure considerable savings (approximately £67 million) for the sector by securing changes to the initial government proposals.

We now see new legislation laid before Parliament to introduce Alcohol Disorder Zones (ADZ). The practical consequences of this are notable: a local authority will be able to impose a levy on all licensed premises within the zone to pay for services such as extra night-time policing and additional street cleaning. The WSTA is lobbying hard in the House of Lords for serious changes and clarification to this legislation, which simply appears to duplicate a lot of the measures contained in the Licensing Act and potentially will also financially punish responsible traders for the acts of their less responsible neighbours. This is completely unnecessary legislation brought in by a government eager to be seen to be cracking down on binge-drinking. It will add more cost, and the majority of the powers are already available to local authorities. Moreover, if a local authority gets a new revenue stream, will it really be willing to give it up? Is an ADZ a self-fulfilling prophecy – the income derived pays to clear up the problem, but if the income stops, the problems will come back? Once an ADZ starts, will it ever stop?

All new regulation comes at a cost, whatever its intention, and one of the primary roles of the WSTA is to persuade the government to work with the trade to tackle issues of concern and to avoid new regulation. If they do decide to follow a regulatory path, then it is our job to minimise the impact. We are working hard to show the government that the industry does take responsible production, marketing and sale of alcohol seriously. The alternative could be more regulation.  db May 2006

Jeremy Beadles is chief executive of the WSTA